Success Stories
from the Secondary Metals Industry

Problem:
Our client is a secondary metals division of a multi-billion dollar supplier of metals and metal products to the automotive and appliance industries, with facilities in the U.S., Canada and Mexico. The division was gaining market share, but the incremental sales volume was attained by selling at a significantly reduced price. Profitability had declined to the breakeven point and the division was in jeopardy of incurring significant losses, if raw materials cost began to increase. Also, the company’s manufacturing systems were, in many cases, stand alone and cost information could not be consolidated and rolled up to the parent company, without manual intervention. This reduced accounting accuracy and the timeliness of reporting.

What We Did:

• Worked with the client to implement an inventory management system, which uses sophisticated mathematical models to evaluate the mix and cost of scrap metals, and then recommend the optimum low cost mix, based on the current inventory position.
• Used design-of-experiments and Supply Chain Management techniques to reduce furnace-charging time, reducing manufacturing costs, and increasing capacity.
• Worked with the client to evaluate alternative ERP systems solutions, and implemented an ERP system that integrated the manufacturing and financial systems in each of the plants, regardless of location or currency.

Impact:

• Achieved a raw material cost savings from $0.02 / lb. to $0.08 / lb., worth $30 million in profitability.
• Reduced inventory levels by 25%.
• Reduced labor cost by 40%.
• Reduced furnace-charging time, resulting in a 50% increase in capacity, using currently available facilities.

Success Stories
from the Precision Metals Industry

Problem:
The profitability of the business was well below the standards of the parent company, reporting about 2% profit after taxes. Cycle time was running from three to four weeks and their customers were not satisfied with the company’s performance in either cycle time or quality. Additionally, the customers were asking for significant cost reductions and improved service after the sale. In some cases the company was in jeopardy of losing existing business.

What We Did:

Led a combined client and consulting team to simultaneously restructure multiple facilities across the country…

• Applied Lean Manufacturing principals to the manufacturing processes.
  • Changed the shop floor layout to support cellular manufacturing and improved material flow.
  • Implemented Pull Systems and Kanbans
  • Implemented Set-up Reduction SMED
  • Introduced Total Quality Management principals.
  • Created cross functional problem solving teams.
• Introduced simplified purchasing strategies that reduced the number of suppliers and implemented pull scheduling processes throughout the supply chain.
• Simplified shop floor control practices, and restructured the BOM to reduce systems lead time and to simplify forecasting and scheduling.
• Outsourced the manufacture of small metal parts and components to manufacturers specializing in low to medium volume stamping and punching operations.

Impact:

• Increased EBIT from 7% to over 16% and profit after tax from 2% to over 7%.
• Increased cash flow and RONA from 12% to over 40%.
• Decreased cycle time from over 23 days to less than one day.
• Reduced non-value added process time from 75% to less than 50%.
• Increased customer satisfaction, resulting in additional business. Because the restructuring allowed the business to nearly double capacity without adding people or equipment, the cost of the additional business was the Direct Material and Labor cost. This provided the business the means to reduce prices and still increase profit.